Gold futures hit record highs again this week, giving another nudge to the gold rush on Main Street as some people scramble to turn in their old jewelry for cash.
The price of the gold futures hit a record $1,139.20 on Monday, even touching a high of $1,144.20 before falling back, confounding market analysts who thought there was no way gold would remain so expensive when it first cracked the unheard-of $1,000 mark last year.
The remarkable run has implications far beyond savvy investors.
"If it's something just sitting in a drawer, you might as well sell it," said Claude Sutherland, owner of Modesto Gold, Jewelry & Coins at 109 Needham St., which opened in 2006. "When I got into this gold was at $500, now it's more than doubled."
In the Northern San Joaquin Valley, more and more people have been showing up to sell their gold at Brooks Pawn & Jewelry in Modesto, according to owner David Brooks.
While he does see some gold bars, Brooks said most people are bringing jewelry they don't wear, including some elaborate pieces.
"The price of gold just keeps breaking records and that's getting a lot of attention," Brooks said. "People are watching and bringing in items to be appraised when they like the price."
Brooks, who founded the business at 1501 Coffee Road in 1981, said the tough valley housing market is also prompting people who are in difficult financial situations to turn their jewelry into cash. "We are seeing some people coming in here we don't normally see, people who seem pretty well off."
For those who don't want to sell their jewelry, he also makes loans through his pawn operation.
For those looking to sell jewelry, Brooks recommends they get bids and appraisals from different dealers to ensure the best price. He said dealing face-to-face with prospective buyers means people can walk away if the price isn't right, something they can't do when shipping to brokers out of the area.
Typically, gold is a safe place for investors to park their money, not something they buy to make money. It doesn't earn interest, and because it's always sought- after, its value tends to be fairly stable.
For example, gold first reached $1,000 in March 2008, shortly after the collapse of investment bank Bear Stearns. Investors bought it then because they feared for the stability of the financial system.
This time is different. Investors -- think of them as the '09ers -- are buying gold to protect themselves against the falling dollar.
Currencies are weak investments around the world because of record-low interest rates. Foreign banks that hold substantial amounts of U.S. debt, such as China's, want to diversify their holdings. News earlier this month that India's central bank bought nearly $7 billion worth of gold from the International Monetary Fund triggered a frenzy of gold buying.
The surge has been remarkable. Gold is up 7 percent just this month, and 26 percent for the year. Some forecasters see it going to $1,200, $1,500 or beyond -- unless the buying frenzy comes to a halt.
Some analysts are panning the gold speculation.
"You just don't see increases like this over the short term" that last, said Steve Condon, director of investor advisory services for Truepoint Capital in Cincinnati. "This isn't materially different from gambling."
Nevertheless, people across the country are cashing in.
But the rising price of gold has put a dramatic dent in jewelry sales, already suffering from the recession.
Ron Yates, co-owner of Yates & Co. Jewelers at 3501 McHenry Ave. in Modesto, agreed that soaring gold prices have hurt retail sales.
RSS
E-Mail
Print
reprint or license
